Gold Dropped As Investors Braced For A Key US Inflation Reading

  • Kedia Advisory
  • Commodities News
Gold Dropped As Investors Braced For A Key US Inflation Reading
Credit: © Reuters.

Gold prices experienced a decline of -0.31%, settling at 62149, as investors prepared for a pivotal U.S. inflation reading with potential implications for Federal Reserve monetary policy. New York Federal Reserve President John Williams indicated that the U.S. central bank is on a path to cut interest rates "later this year," despite stronger-than-expected inflation and labour market data in January. Williams emphasized that his overall view of the economy remains steady, highlighting that inflation progress toward the Fed's 2% goal might be "a little bit bumpy" but is ultimately moving "in the right direction.

" As the vice chair of the Fed's rate-setting Federal Open Market Committee, Williams holds significant influence. The Federal Reserve has maintained its benchmark overnight interest rate in the 5.25%-5.50% range since last July. Fed officials are cautious about near-term interest rate cuts, given the unprecedented economic conditions they are facing. Investors are closely monitoring the monthly personal consumption expenditures price index, the Fed's preferred inflation gauge, scheduled for release on Thursday. Additionally, attention is on economic indicators such as personal income and spending data, along with speeches by several Fed officials throughout the week. 

Technically, the market witnessed long liquidation, with a 2.01% drop in open interest to 13,033. Gold has support at 62020, and a breach below could test 61890. Resistance is likely at 62310, and a breakout could lead to a test of 62470.

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